Together, we can get through this . . .

The housing market won’t recover until employment increases and consumers become more confident. (Source)

With 22% of the adult non-institutional population unable to find full-time work (according to the estimable Shadow Government Statistics website), no reduction in interest rates will persuade Americans to go back to the borrowing binge of the 2000s. (Source)

Unemployment Soars among the Younger Generation–85% of college seniors plan to move back home with their parents after graduation. (Source)

Because the younger “next generation” is already loaded down with student loan debt from paying for their college education and, until they find a job and pay down their student loans, they cannot qualify for a home mortgage–which means few first time home buyers:

A typical college student who earns a 4 year degree today also graduates with $20,000 to $100,000 in debt. (Source)

There are 70 million Americans born between 1945-1960. One-third have zero retirement savings. The oldest are 64. The only money they have is equity in a house, so they must sell. This will add yet another flood of houses to the market, driving prices down even more. (Source)

As the Boomersretire, they sell real assets (the US may have a 40% oversupply of large-lot family homes by 2020), and buy financial assets, just like the Japanese during their great retirement wave of 1990-2000 (which coincided with the lost decade). (Source)

Because renting is cheaper:

Because it’s often still much cheaper to rent than to own the same size and quality house, in the same school district. On affluent areas, annual rents are 2.5% of purchase price while mortgage rates are 5%, so it costs twice as much to borrow the money as it does to borrow the house. Renters win and owners lose! Worse, total owner costs including taxes, maintenance, and insurance come to about 9% of purchase price, which is more than three times the cost of renting and wipes out any income tax benefit. Buying a house is still a very bad deal in those neighborhoods.

The only true sign of a bottom is a price low enough so that you could rent out the house and make a profit. Then you’ll know it’s safe to buy for yourself because then rent could cover the mortgage and all expenses if necessary, eliminating most of your risk. The basic buying safety rule is to divide annual rent by the purchase price for the house:

House prices rose as interest rates fell, and house prices will fall if interest rates rise without a strong increase in jobs, because a fixed monthly payment covers a smaller mortgage at a higher interest rate. Since interest rates have nowhere to go but up, prices have nowhere to go but down. (Source)

Because there is a huge glut of empty new houses:

Builders are being forced to drop prices even faster than owners, because builders must sell to keep their business going. They need the money now. Builders have huge excess inventory that they cannot sell at current prices. (Source)

Because there is a massive and growing backlog of latent foreclosures. Millions of owners have simply stopped paying their mortgages, and the banks are doing nothing about it, letting the owner live in the house for free. If a bank forecloses and takes possession of a house, that means the bank is responsible for property taxes and maintenance. Banks don’t like those costs. If a bank then sells the foreclosure at current prices, the bank has to admit a loss on the loan. Banks like that cost even less. So there is a tsunami of foreclosures on the way that the banks are ignoring, for now. To prevent a justified foreclosure is also to prevent a deserving family from buying that house at a low price. Right now, those foreclosures will wash over the landscape, decimating prices, and benefitting millions of families which will be able to buy a house without a suicidal level of debt. (Source)

The expected flood of foreclosures in the near future are likely to further depress prices of homes–which could put even more home owners “under water” (owning more on their mortgage than the home is worth if sold), which could lead to even more home owners to stop making payments, and so on . . .